Betting on Blockchain

By CINDY SANDERS

July 10, 2018

Kristen Johns

Blockchain has become a hot healthcare buzzword over the last couple of years. One of the key reasons so many in the healthcare industry are working to unlock the technology's potential is the promise it holds to revolutionize the field by creating a safer, more cost efficient data sharing system with both clinical and back office application.

Still in its infancy, there are numerous hurdles to clear to fully deploy blockchain throughout healthcare, but a number of companies have already begun utilizing the technology. "Three or four months of 'blockchain time' is like a year of regular time ... so much is happening so fast," said Kristen Johns, a partner at Waller in the firm's Intellectual Property practice group.

Considering the regulatory and legal hurdles that come with any transformative change, it is perhaps not surprising that some of the earliest blockchain experts have come from the legal field.

Chris Sloan

"It's simple from our point of view," noted Chris Sloan, a shareholder with Baker Donelson who is chair of the firm's Emerging Companies group and also leads the Blockchain & Cryptocurrency team. "We believe blockchain is going to become a very widespread and widely adopted technology across almost all industries. It makes sense for us to get on board early to be able to advise our clients on it."

Blockchain Basics

Sloan likened blockchain technology to the Internet in the late 1990s. "You've got a disruptive technology that has significant and diverse applications across all industries, and it's colliding with existing legal and regulatory schemes," he pointed out. Like the Internet, he anticipates those issues ultimately will be addressed to make way for broad deployment of the technology.

"Blockchain works really well anytime you have an intermediary that's necessary to complete a transaction," he added of the decentralized technology that lends itself to process automation. "The other area where blockchain works very well is where you need to preserve the integrity of the data."

Johns was immediately intrigued by the potential power of blockchain when she was first introduced to the concept a couple of years ago. There was a competition to write a white paper about blockchain for the National Institute of Standards and Technology (NIST) and the Office of the National Coordinator for Health Information Technology (ONC). "I flippantly said, 'That's a no-brainer,' and then sat down and figured out how hard it was," she said with a laugh. Although Johns didn't win the competition, she did gain a great deal of insight into the new technology and now leads Waller's Distributed Ledger/Blockchain practice.

Josh Ehrenfeld

Recognizing the concept of blockchain can be difficult to grasp for experts and certainly for providers, Josh Ehrenfeld, Corporate and Tax partner at Burr & Forman and a member of the firm's Blockchain, Cryptocurrency and Electronic Transactions group, suggested thinking of the technology as a baseline platform with cryptocurrency and various other financial and clinical functions being related applications just as Excel and Word are programs under the Microsoft Office umbrella.

"At the end of the day, it's a data-based platform," he continued. "It allows for a more efficient and locked-in transfer of information. It takes the blocks and locks them up ... they're immutable." Ehrenfeld added that once information is put into the system, it cannot be changed so if an error is initially made or circumstances shift, a new block must be added to update the original information.

Back Office Functions

One of the benefits of having a decentralized permanent record is that it allows everyone to see the same information without having to re-input the data for each user ... thus minimizing transcription errors and making it nearly impossible to surreptitiously alter data once its entered. However, Sloan pointed out, that doesn't necessarily mean blockchain will eliminate fraud. "Just like any system, it's only as good as the data put into it. It won't stop fraudulent data that was put in from the start but would be easily visible if manipulated once in."

All three legal experts agreed back office functions have seen the most blockchain activity thus far. "It's a powerful tool to reduce transaction cost because most transactions can be replicated, and it allows you to replicate them in a more efficient and less costly manner," said Ehrenfeld.

Johns said some of the first functions utilizing blockchain technology are the 'low hanging fruit' applications that are easier to roll out with more complex uses to come as technology and legal hurdles are addressed. Still, she said, the movement is rapid. "The conversation is not so much about education now. It's about use cases and where do we start and where do we go?" she noted of making the leap to the next level of deploying blockchain in healthcare.

Clinical Support

"The holy grail of blockchain is medical records," stated Johns, who added a number of regulatory concerns must first be addressed. However, she said, the potential for improved communication ... and, in turn, improved quality and safety ... is too great to be ignored.

"Is the promise of blockchain the ability to connect across the continuum of care? The answer is a resounding, 'yes.' How that happens, time will tell," she said.

Ehrenfeld noted one of the major upsides to using the technology with electronic health records is its decentralized nature, which allows participants across the chain to access information from different locations. Everyone from a patient's internist to specialists to an urgent care provider seen while on vacation could potentially have access to the EHR and pertinent clinical information including medication allergies and co-occurring conditions.

However, he noted, "Once you start putting someone's health record on this chain, if someone hacks into it, you have a huge issue. Security becomes that much more critical."

Data is, of course, encrypted ... and Ehrenfeld pointed out those using blockchain in a clinical setting face the same issues as an individual office with protected health information. In both cases, a strong cybersecurity plan should be in place that looks at processes, risk management and action plans in case of a breach. "The treatment you have from the protection and response side is similar to existing protocols but will ultimately have to be tailored and enhanced to account for blockchain technology."

Barriers

Sloan said there are a number of barriers to broadly implementing blockchain ranging from regulatory concerns with existing laws to inertia. "Historically, the healthcare industry has been one of the slowest adopters of technology," he pointed out. "Is it better now than 20 years ago? Exponentially so, but I still think it's going to take a little bit longer than people think."

Sloan noted it isn't the young, nimble companies that are the issue in deploying blockchain. "It's that you have to get so many disparate groups on board - providers, payers, regulators - it's a lot of mouths to feed."

Johns said scalability is an issue and noted many potential applications aren't readily available, as the underlying technology doesn't currently exist. "We can see what is possible, but we're just not there, yet," she said.

Ehrenfeld reiterated the barriers are different on the clinical front where there are more variables than with back office functions. "You are taking the art of medicine and trying to marry that with an executable and replicable set of activities," he pointed out. Working through complicated medical scenarios and permissions are key reasons Ehrenfeld thinks it will take more thought and time before blockchain is widely deployed on the clinical front. "I have no doubt someone will figure it out, I just don't know what that looks like, yet."

Next Steps

While there are multiple hurdles to overcome, blockchain is increasingly being considered as a way to innovate business functions. Johns, Ehrenfeld and Sloan all three said it was easy to see the allure of the technology in the healthcare setting.

"It adds efficiency and integrity to any system that involves data moving back and forth between multiple parties," Sloan pointed out. "Anyone in healthcare can probably think of a dozen areas where a blockchain network could save time, save money, reduce errors and add transparency ... and that's powerful for healthcare."

Ehrenfeld echoed those thoughts, saying, "It's a powerful tool to achieve these results, but the devil is going to be in the details."

Johns noted, "Some entities are calling what they're building a blockchain when it isn't at all ... but that's okay. It's still innovative and offers more efficiency, greater transparency and improved security." She continued, "Even if blockchain isn't your answer - and often, it isn't - that's okay. It has still forced you to look at your infrastructure, existing procedures and even policies in a fresh way. Blockchain technology can inspire those conversations."

Johns added, "I think it would be a mistake to ignore this. Even if you are a skeptic, you should pay attention. It would be naïve to say this is a passing fad. It's not a matter of if ... it's a matter of when ... and that answer will depend on the use case."

Mark Your Calendars

Distributed:Health 2018

Nov. 5-6 • Nashville

Billed as the premier event for Healthcare X Blockchain and co-hosted by Nashville-based Hashed Health, the two-day global summit will take a deep dive into applications in blockchain technology for the healthcare industry. For more information or to register, go online to: health.distributed.com.